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Changes in remuneration practice in production

Success factors of sustainable remuneration systems for innovative concepts of work organization
: Bullinger, H.-J.; Menrad, W.


International Journal of Production Research 40 (2002), Nr.15, S.3955-3971
ISSN: 0020-7543
ISSN: 1366-588X
Fraunhofer IAO ()

Over the past few years, the German economy has undergone a radical restructuring process. The work organization in producing units has also changed fundamentally. Under the heading 'implementation of team work', task-oriented structures based on the division of labour have been transformed into decentralized integrated structures. However, the adaptation of boundary conditions, like the remuneration system, has not been considered sufficiently, which is the cause of several problems in the restructured domains of the companies. Based on a study by the Fraunhofer Institute for Industrial Engineering, Stuttgart, in 2000, the paper describes the effects of the implementation of teamwork on remuneration strategies in producing units. Exclusively, skill-based systems, for instance, have been replaced by performance- and profit-related systems. When producing units of restructured companies, output quantities are not the only performance measures used. The application of quality-, time- or cost-oriented characteristics open up possibilities to match the new requirements companies are confronted with. The propagation of teamwork also effected the propagation of team-oriented remuneration systems. Furthermore, the paper tries to evaluate different conventional remuneration systems owing to their aptitude to be implemented in innovative work organizations. Criteria, for instance, are the motivation to increase performance and improve profit orientation, the limitation of the payload, the limitation of the expense of maintenance of the remuneration system, the improvement of team cooperation, the possibility of multiple objective control, and the dynamization of remuneration systems. In the following, success factors of innovative remuneration systems for modern work organizations are discussed. These success factors are summarized in detail under the heading 'performance and profit orientation instead of pure skill orientation', 'improvement of cooperation and motivation of the individual', 'enlargement of the conception of performance' and 'dynamization of remuneration systems'. A short overview on the further development of remuneration systems is also given.